October 8, 2015

Thursday, October 8, 2015
Lima, Peru

ALAIN BIFANI, Director General, Finance Ministry in Lebanon
MAURICIO CÁRDENAS, Minister of Finance and Public Credit, Colombia
MARILOU UY, Director, G-24 Secretariat
RANDA ELNAGAR, Press officer, IMF Communications Department

Webcast of the press conference Webcast

MS. ELNAGAR: Hello every one and welcome to the IMF and World Bank Annual Meetings in Lima, Peru. I am Randa Elnagar from the IMF Communications department and this is the G24 press briefing. We have with us Mr. Alain Bifani, director general of the Finance Ministry in Lebanon; Mr. Mauricio Cárdenas, minister of finance and public credit in Colombia; and Mrs. Marilou Uy, director of the G-24 Secretariat.

Mr. Bifani, will give the opening remarks and then we’re going to take questions. Thank you.

MR. BIFANI: Thank you very much. Let me welcome you all to this press conference. You have our communiqué, so I will be brief.

Our meeting focused on the implementation of the Post 2015 Development Agenda, particularly with regards to financing for development and sustainable infrastructure. It also offered members a chance to consider the implications of the highly uncertain global economic environment for developing countries. We also had a chance to discuss the role of Bretton oods institutions in this context and their governance reforms.

Ministers recognized that global economic outlook was weaker than it was when we last met in April, but emerging markets and developing countries continue to be key drivers of global growth even if some are experiencing slowdowns. In fact of the uncertainties and higher volatility we committed to take actions to address unemployment, poverty, and inequality while building strong foundations for inclusive growth. In the short term, we expressed concerns about the risk of sharp exchange rate and interest rate changes, as well as the potential of even great volatility and spillovers resulting from monetary policy normalization.

More broadly, ministers discussed the profound importance 2015 will have for global development efforts. The conclusion of the Millennium Development Goals, the articulation of the 2030 Agenda for Sustainable Development, and the Sustainable Development Goals, the agreement on the Addis Ababa Action Agenda on Financing for Development, and finally the 21st Conference of Parties at the end of the year in Paris. We agreed that given the enormous challenges that still persist across the world, this is a time for us to work together to meet our common goal.

Achieving our growth and development goals in an inclusive, sustainable way will also require a substantial augmentation and revitalization of development finance. We committed to broad actions to strengthen domestic sources of finance, but also called for cooperation from the international community on tax evasion and noncompliance, delivery of aid commitments, and strengthen development banking.

With regards to the IMF, our discussion today revolved around our deep disappointment with the lack of progress in implementing the IMF quota and governance reforms already agreed in 2010. In our view, this creates an impediment to the credibility, legitimacy, and effectiveness of the IMF. Ratification of the 2010 reforms will remain our priority. Nevertheless, appropriately designed interim options can result in meaningful shifts in representation towards developing countries as is envisaged by these reforms. We prefer options that would meaningfully increase IMF resources, as well. All possibilities to sustain voice and governance reforms need to be considered providing they do not lower the incentives to complete the 14th General Review of Quotas or begin work towards the 15th General Review.

We also discussed the role and reform of the World Bank Group. We reiterated our call for a timely agreement on a dynamic formula for future realignments and stressed that it must deliver meaningful increases of the voice of developing countries, moving towards equitable voting power while protecting the smallest poor countries.

We discussed the ongoing safeguards review and the need to ensure that the new framework and its implementation serve to improve operational efficiency and enhance development results without imposing undue burden on borrowers.

With that, the floor is open for questions.

MS. ELNAGAR: For questions please identify yourself and your organizations. The mics are on the sides of the room.

QUESTIONER: I just want to know, you talked about appropriate interim measures. What do you mean by those? Can you please elaborate?

MS. UY: Well, in our communiqué we expressed worry about the long delay of the 2010 reforms and we urged the IMF to do some interim measures. We had indicated that we our priorities, of course, are 2010 reforms, but if it’s not to be for the moment, then some interim measures could be pursued. In our communiqué we indicated that we would prefer an interim option that not only realigns some of the shareholding in favor of emerging and developing countries, but also find the means to increase resources for the IMF because both are really quite necessary.

So the actual design of it would have to depend on, of course, a discussion of the IMF Executive Board of Directors.

QUESTIONER: Gracias. I want to know if in the meeting with the ministers the matter of the restoration of the sovereign funds was on topic, if the ministers talked about that.

MS. UY: In our communiqué, again, which is now being distributed to you, there is a paragraph on holdout behavior and the worry -- we expressed worry over the possibilities of holdout behavior that delays the resolution of debt when that time actually happens. So that worry remains and we then welcomed the improvements in the contractual clauses for sovereign issues. The collective action, the modified collective action clauses and the modified pari passu clauses and encourage countries to include them in their sovereign debt issues in the future to make sure that more and more of these issues would have these modified clauses that would constrain holdout behavior.

We also welcomed the U.N. principles for sovereign debt resolution that was passed recently on September 10.

MS. ELNAGAR: Other questions?

Mr. Cárdenas is going to give some comments.

MR. CÁRDENAS: Thank you. Thank you very much. My name is Mauricio Cárdenas. I’m the finance minister from Colombia. And I’d like to say a few words in English, but also, if you’ll allow me, given that there’s a Spanish-speaking group of journalists, I’d like to address them, also, in Spanish.

So for the English-speaking audience, the point I want to highlight is that the G-24 has met today and, as you can read in the communiqué, has explicitly said that it regrets that the quota that was approved in 2010 for the IMF reform has not been approved by the U.S. Congress. That’s a reform that should take place and should be fully implemented as soon as possible.

Also, the G-24 considers that the representation from emerging and developing countries at the World Bank should be increased and that there is a need of greater voice from the emerging and developing countries. That is in the direction of having more equitable voting power within these two institutions, which should reflect the share that emerging and developing countries have today in the world’s GDP.

The other aspect which was discussed is the need to ensure that the World Bank and the IMF have the capacity to finance the development process in the years to come, and that should perhaps, in the case of the World Bank, include a discussion about capital of the World Bank. It’s a discussion that is necessary. This, because it is likely that with the increase in interest rates in the United States, which seems inevitable and also necessary, there are going to be changes in the conditions in financial markets. So we have to have multilateral institutions ready to undertake greater challenges and help minimize the risks of reduced capital flows, and that is very important, as well.

This is particularly relevant in the case of infrastructure financing. Infrastructure financing is necessary across the emerging and developing countries. And infrastructure financing requires the capacity to mobilize resources not just from domestic, but also from international sources. And (inaudible) the World Bank and the IMF in that regard is very important.

We welcome the announcement made by the IMF that the IMF will provide technical assistance in the form of the capacity to analyze the PPP initiatives, public-private partnerships, so that finance ministries have the capacity to assess the risks and the financial consequences of PPPs.

And last but not least, there is also in the communiqué a reference to the importance of making sure that there is a greater international cooperation that prevents tax evasion and illicit financial flows. Tax evasion and illicit financial flows create major problems for emerging and developing countries. We welcome very much the OECD BEPS initiative -- Base Erosion and Profit Shifting -- but we also think that it has to be extended to other emerging and developing countries beyond the scope of the OECD and the G-20.

So those are essentially some of the remarks that were made today. Also, the G-24 group considers that the emergence of the new development banks, like the Asian Infrastructure Investment Bank and the new Development Bank, are welcome. But they should also work in cooperation and in a complementary way with the currently multilateral development banks. So those are some of the issues that were discussed today.

Now if you’ll allow me, I would say almost the same thing, but in Spanish.

Buenos tardes. Good afternoon. I’m the minister of finance of Colombia and the vice chair newly elected to the G-24. As you know, the G-24 is a group of 24 emerging and developing countries which seek through this forum to coordinate their views so to better express a united position at the World Bank and IMF Annual Meetings and Spring Meetings. We aim to ensure in this context that our countries have a greater voice, have greater presentation in the decision-making bodies of these two international financial institutions. And we believe that that representation should increase in terms of the position of these countries, the weight of these respective countries in the international economy.

Since the founding of these institutions, things have changed and the relative weight of these economies has changed. That is why we believe that it’s important to move forward in the struggle to ensure that the quotas reflect the new relative weight of our countries in the world economy. It’s important, therefore, to ensure that these IFIs, these international financial institutions, be shaped in a manner that will allow us better to face the challenges that come from the drop in commodity prices on the one hand and the likely increase in interest rates in the United States, as well as other challenges. And it is for that reason that it’s most important that the IMF and the World Bank should be duly capitalized and come up with the right instruments in order to assist us obtain the necessary capital to move forward in our plans.

But this means that we must -- that is, those institutions must be able to tap capital. And to that end, attention is being paid to anything that reduces the fiscal capacity of the members states of these two groups, of these two bodies. And that is why there is an international move afoot, led by the OECD together with the G-20, to better control tax evasion and ensure or more towards ensuring that there are no longer any tax havens. We would like those initiatives that have been moved within the context of the OECD countries and the G-20 to be extended to the other countries, to ours in particular, where emerging economies and developing countries need very much to tap capital and ensure that monies are not flowing into tax havens that will, therefore, not be available to us.

Finally, the G-24 Intergovernmental Group is very attentive, therefore, to how international decisions may affect us. I’ve mentioned the likely rise in interest rates, a decision that may well be taken by the Federal Reserve of the United States, and feel that its capital -- that it’s key that that decision be taken in an orderly fashion and duly alerted to the rest of us, so that we are not suddenly caught short and found to have to face a sudden decision that may have a deleterious influence on the capital flows that we very much depend upon. That’s why we hope that the monetary authorities of the United States will take due account of this need, this position of the Intergovernmental Group of 24, that together in a coherent and common position asks that we have greater impact and greater voice, therefore, in fora such as these.

Thank you.

MS. ELNAGAR: Any questions?

Okay, with this we end our press conference. Thank you very much.
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